EUR/USD Daily Outlook

Daily Pivots: (S1) 1.4410; (P) 1.4471; (R1) 1.4557; More

EUR/USD continues to recover after drawing support from medium term rising trend line. With 4 hours MACD crossed above signal line, intraday outlook is turned neutral for the moment and some more recovery could be seen. Nevertheless, another fall is still in favor as long as 1.4811 resistance holds, to key medium term support at 1.4309. However, note bullish convergence condition in 4 hours MACD and RSI, break of 1.4811 will indicate that a short term bottom is finally in place and bring stronger rebound to test 1.5284 double top neckline resistance before staging another fall.

In the bigger picture, the double top reversal pattern (1.6019, 1.6038) serves as an important signal of completion of medium term rise from 1.1639 (05 low), which is supported by the decisive break of 55 weeks EMA. Weekly MACD turned negative last week, adding another bullet for this case. Though focus will still be on a) whether key support level of 1.4309, (38.2% retracement of 1.1639 (05 low) to 1.6038 at 1.4358, 61.8% retracement of 1.3262 to 1.6038 at 1.4322) will hold; b) whether next trend line support (1.1825, 1.2483, now at 1.4404) will hold; c) whether monthly MACD will cross below signal line for confirmation. On the upside, sustained break of double top neckline resistance is needed before considering that decline from 1.6038 has completely finished. Otherwise, another fall is still expected in case of rebound.

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